In re: Posco – Providing U.S. Discovery to Foreign Courts

August 7, 2015

On July 22, 2015, the United States Court of Appeals for the Federal Circuit examined an interesting issue of first impression: whether confidential documents subject to a protective order can be provided to foreign counsel for use in parallel proceedings in foreign courts. Although holding that the protective order could be modified under certain circumstances, the Federal Circuit vacated the lower court's order allowing for the use of discovery in foreign proceedings. See In re: POSCO, Case No. 15-112 (July 22, 2015).

Facts of the Case

The underlying case involved claims of patent infringement and unfair competition brought by Nippon Steel & Sumitomo Metal Corporation ("Nippon Steel") against POSCO and its U.S. subsidiary. In addition to the U.S. case, Nippon Steel also filed suit in Japan against POSCO for trade secret appropriation; and POSCO filed a declaratory judgment action in Korea asserting that POSCO had not stolen Nippon Steel's trade secrets.

After discovery had been conducted in the U.S. case pursuant to a protective order, Nippon Steel sought modification of the U.S. court's protective order in order to provide the discovered documents to foreign counsel for use in the Japanese and Korean actions. The reasoning behind this requested modification was fairly straightforward: discovery in U.S. federal court is more robust and generous than discovery in Japan and Korea, and the modification would provide foreign counsel with documents that otherwise would have been unattainable in either foreign jurisdiction.

The Decision

In its opinion, the Federal Circuit wrestled with the significance and effect of 28 U.S.C. § 1782, which provides in relevant part:

The district court of the district in which a person resides or is found may order him to . . . produce a document or other thing for use in a proceeding in a foreign or international tribunal . . . upon the application of any interested person . . . [and unless otherwise specified] the document or other thing [will be] produce[d] in accordance with the Federal Rules of Civil Procedure.

28 U.S.C. § 1782(a). The U.S. Supreme Court, construing § 1782, provided the following factors to be considered:

(1) whether 'the person from whom discovery is sought is a participant in the foreign proceeding'; (2) 'the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance'; (3) 'whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States'; and (4) whether the request is otherwise 'unduly intrusive or burdensome . . .'

In re: POSCO, slip op. at 9 (quoting Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65 (2004)).

Although conceding that § 1782 and Intel do not necessarily control in the case of a modification of a protective order, the Federal Circuit held that nonetheless such factors must be considered where, as here, a party seeks to use information obtained through discovery in foreign proceedings. In other words, whenever a party seeks to use U.S. federal courts to obtain documents or information for use in foreign proceedings, the considerations laid out in Intel must be weighed—foreclosing any attempt to circumvent the same through alternative legal processes.

Impact

As mentioned above, this case dealt with an issue of first impression, and it remains to be seen how the case will be utilized and interpreted going forward. That being said, the holding could significantly impact coordination between U.S. and foreign counsel in multi-country litigation, as can be common in intellectual property disputes. Individuals or businesses facing issues of infringement should consult with an experienced attorney to discuss how best to navigate these complex and evolving legal issues.

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